Yoshida in Japan: Ailing companies to break away from past

After posting an annual net loss of $5.4 billion, Sharp pulled off a major reshuffle of its management team by naming a new president and chairman.

This recognition of “breaking away from its past” rings true not to
Sharp alone. It’s almost a recurring theme among similarly troubled
Japanese companies in the electronics industry. Every company is looking
for a new leader who can mentally and emotionally sever the tie with
tangled past – whether it refers to a production division, a business
strategy or people he worked with.

In fact, Sharp’s
new-president-to-be, Takahashi, is described as a veteran executive at
Sharp who doesn’t come with “TV baggage.”

The 58-year-old
Takahashi, responsible for white goods and copier businesses, has never
held a senior position in the company’s digital entertainment goods
segment.

Appointing as the company chief an executive who’s had
little to do with the company’s loss-making business does seem like a
breath of fresh air blown into a stagnant organization. Fresh ideas and
brave decisions ought to come more naturally from someone whose eyes are
not already clouded with conventional wisdom or past experiences – at
least in theory.

What about Panasonic and Sony?

Kazuhiro Tsuga, for example, became Panasonic's
president last year, and swiftly issued a decisive order to stop PDP
production, an act that shocked many in Japan. Tsuga, who was put in
charge of Panasonic’s AVC Networks Company recently, had very little to
do with Panasonic’s past decisions to continue to invest in PDP.

Despite
the company’s own engineering propaganda that “PDP technology offered
noticeably better picture quality than LCD, especially in a dark room,”
the independent-minded Tsuga, when he became responsible for the
company’s TV business, conducted month-long, side-by-side comparisons at
his own home. He declared that he found little difference in picture
quality. He then remarked: "Besides, most people watch TV with the
lights on.”

Kazuo Hirai, who became CEO and president of Sony Corp. last year, also falls into the category of having no “TV baggage.”

Having
started his career with CBS/Sony Inc. (now Sony Music Entertainment
Japan) in the mid- 1980’s, Hirai’s ascension has everything to do with
the success of Sony Computer Entertainment. The company’s strategy
outlined by Hirai last year called for three key business focuses:
digital imaging, mobile and gaming. No mention of TVs.

How he’s
charting Sony’s future, however, remains to be seen. Sony’s long-held
belief in owning both software and hardware under one roof is being
challenged by activist hedge-fund manager Daniel Loeb. Armed with a 6.5
percent stake in Sony, Loeb is asking Sony to take its entertainment arm
public.

According to Loeb’s proposal, by selling a stake of 15
to 20 per cent of Sony’s entertainment business to existing
shareholders, Sony could raise capital that could be used to strengthen
its long-struggling consumer electronics business.

Sony has said
only that Sony Entertainment is “not for sale.” But Hirai, who has
grown up in the entertainment side of Sony, will be tested if he decides
to stick with Sony’s own-it-all philosophy. Hirai is scheduled to make a
presentation to Sony investors and media next week.

All technology advances run in cycles. A good company will embrace that change and prepare their country to move forward with new technologies.
Unfortunately, some companies get so tied up extracting the last dime out of the old technology that they forget to prepare for the future.
In many ways, Japan is not alone in this problem. Europe too is experiencing a lapse from the old technologies to the new. Unfortunately, they tied themselves up with the EU distribution of industries that locked many companies into not dormant technologies.
You must constantly innovate and move forward. The world will not stop and wait for you.